Hearing on Loan Guarantees and Rural Television Service

10:00 a.m., Tuesday, February 1, 2000 - Dirksen 628

Mr. Chairman and Members of the Committee, thank you for the opportunity to appear
before the Committee today to discuss current federal communications law and technical
and other issues related to the transmission of local television signals to rural areas of the
country. Before I begin, I want to clarify that the views I express today are my own, and
may not necessarily reflect the views of the Commission (FCC or Commission).

SHVA Provisions

First, I want to provide an overview of the most relevant, communications-related
provisions of the Satellite Home Viewer Act (SHVA), enacted in 1988, and the more
recent Satellite Home Viewer Improvement Act (SHVIA), enacted last November.
Congress enacted the SHVA to establish a limited exception to the exclusive
programming copyrights held by television networks and their affiliates. It did so
because it recognized that some households were unable to receive network signals
directly over-the-air. The exception permitted satellite carriers to transmit local TV
signals to "unserved" households. SHVA defined an "unserved household" as one that
"cannot receive, through the use of a conventional outdoor rooftop receiving antenna, an
over-the-air signal of grade B intensity (as defined by the Federal Communications
Commission)."

Last February, the Commission provided consumers as well as industry a uniform
method for measuring the signal strength at individual locations that was much simpler
than the method previously contained in the Commission's rules. In addition, last
February the Commission endorsed a computer model for predicting Grade B strength in
lieu of actual measurements. Known as the "Individual Location Longley-Rice" or
"ILLR" model, and similar to the point-to-point predictive model the Commission had
established for digital television (DTV) allocations, the model provided a practical and
readily available methodology for predicting signal intensity at individual locations.

SHVIA Provisions

Last November, Congress enacted the Satellite Home Viewer Improvement Act
(SHVIA) to foster competition in the multichannel video programming distribution
(MPVD) market and increase programming choices for consumers. SHVIA amended the
copyright law to authorize satellite carriers to retransmit local TV signals to all
consumers in a station's local market. (This is commonly referred to as "local-into-local"
service.) Until May 29, 2000, satellite carriers can deliver local signals without local
broadcasters' permission; after that date, such permission is required. SHVIA also
requires the FCC to take all actions necessary to make a determination regarding licenses
or other authorizations that will utilize spectrum otherwise allocated to commercial use
for the delivery of local signals to satellite subscribers in unserved and underserved local
markets, and to issue a report to Congress by January 1, 2001 on the extent to which such
actions have facilitated delivery into unserved and underserved markets. SHVIA also
continues to authorize satellite providers to retransmit distant network signals (i.e.,
signals originating outside a subscriber's local television market) to unserved households,
and grandfathers many satellite subscribers who would otherwise not be eligible to
receive distant network service.

SHVIA continues to link the definition of "unserved household" to the FCC's
definition of Grade B signal strength. However, under the new law the Commission is
required to complete an inquiry to determine whether the Grade B standard continues to
be appropriate for determining eligibility for distant network service, report its findings to
Congress and, if appropriate, recommend modifications of the Grade B standard.
(Although the statute requires that this inquiry be completed by November 29, 2000, the
Commission intends to complete this inquiry by June 1, 2000.)

SHVIA also requires that, by May 27, 2000, the Commission amend its rules to
establish a predictive model for determining whether consumers at individual locations
can receive signals of Grade B intensity. SHVIA specified that the Commission should
rely on the ILLR predictive model it endorsed last February, but that improvements
should be made to account for terrain, buildings, and other land cover variations. SHVIA
further requires that the Commission establish procedures for continued refinement in
applying the ILLR model as additional data become available. The Commission released
a Notice of Proposed Rulemaking seeking comment on these issues on January 20, 2000.

Technological Options

With this overview of SHVA's and SHVIA's provisions related to local-into-local
service and of the Commission's role in its implementation, I want to discuss, first, the
various technological options for delivery of television signals to unserved and
underserved rural areas, and second, some of the economic, technical or other barriers or
limitations on the viability of those options to provide service to these areas. At the
outset, I want to stress that the goal of providing local television programming throughout
our country presents significant technical challenges. These challenges stem from the
sheer size of our country, areas of rugged terrain, and sparse and isolated populations in
some regions.

Advances in communications technology, however, provide a variety of options
to address the goal of providing local broadcast service to rural areas. While no one
technology may be able to solve the entire problem, multiple technologies can be used in
combination to achieve the goal of universal coverage. Local television markets (referred
to as "Designated Market Areas" or "DMAs" as defined by Nielsen Media research) vary
greatly in size, for example, from the whole state of Utah to much smaller areas in
Laredo, TX or Salisbury, MD. Terrain varies also from the appropriately named Great
Plains to the ruggedness of the Rockies and Appalachia. Serving isolated small towns is
a very different problem than serving isolated farms. Different geographical situations in
all probability will demand different technical solutions.

Existing Direct Broadcast Satellite (DBS) systems in the 12 GHz band, such as
DirecTV and Echostar, provide MPVD programming to nearly the entire continental
United States. In addition, existing DBS providers have begun to provide local
programming, but only in the larger markets. This is so even though existing DBS
satellites were not constructed and deployed with the intention that they would provide
local broadcast programming. Present DBS satellites generally cover either the whole or
half of our country. If such a system is used to transmit a local signal, only users in a
very small part of its footprint can receive the localsignal, because, under SHVIA, only
users in the local DMA are authorized to receive the signal, while those outside that
DMA are precluded from accepting the signal. Moreover, because present DBS satellites
are not equipped for frequency reuse throughout their footprints, the power used to
transmit to those portions of the satellite's footprint outside the DMA would be wasted.
While DBS systems can provide 200 or more channels of programming, to provide all
local channels in every market throughout the country would require more channels than
is feasible with currently deployed satellite hardware and existing spectrum.

A new generation of satellites, however, is coming which uses "spot beams," or
more focused transmissions from satellite to earth that covera much smaller area. With
this technology, the same downlink frequency can be reused many times across the
country. This not only increases the capacity of the satellite in terms of the total number
of different signals that can be distributed, but the more focused beams also reduce the
power required per signal. Spot beam technology does requirelarger antennas on the
satellite. Thus, what is now a 90-inch antenna on the satellite must be replaced by one
four to five times larger. However, such large antennas are achievable with today's
technology.

Multichannel Multipoint Distribution Service (MMDS) is the FCC's designation
for a terrestrial fixed wireless service utilizing the 2.5 GHz band of the radio spectrum
whose potential uses include multichannel video distribution. Some of this spectrum is
shared with educational users, but FCC rules permit sharing by educational and
commercial users and many such agreements have been reached. In the past, ownership
of MMDS channels was fragmented and it was difficult to assemble a multichannel
package that would be attractive to viewers, but industry consolidation along with
significant gains in capacity due to digital compression techniques now make such
packaging practical. Many of the new owners of MMDS systems, however, see Internet
access as a more viable product than video distribution, so it is unclear in what direction
MMDS technology is moving.

Local Multipoint Distribution Systems (LMDS)is our designation for a fixed
wireless access system that operates in the 28 GHz range of the radio spectrum. Because
we have allocated over 1,000 MHz of spectrum for this service, LMDS systems are
capable of providing a broadband array of two-way voice, data, and video services.
Because of the high microwave frequencies involved, the range of LMDS systems is
limited to relatively short distances (a few miles) over relativelyunobstructed paths.
LMDS is in the early stages of development and the initial focus seems to be on serving
business users in urban locations. However, over time, LMDS may findapplications in
smaller communities as a way to provide broadband services, including the distribution of
television stations.

TV translators have traditionally been used in rural areas to extend television
coverage. These translators receive a signal on one channel and shift or translate it to
another channel for local distribution. For example, if an intervening ridge or mountain
blocks reception of a signal, a translator can be placed on the top of the mountain (where
reception is good) and used to relay the signal into the otherwise shielded area. Some
translators are owned by originating stations, while others are owned by organizations in
rural areas. Translators can be an economical solution to extending coverage in small
towns and isolated areas when advantageous locations can be found. However, the
ongoing transition to DTV complicates the issue of finding frequencies for new
translators, especially in areas bordering on metropolitan areas. (I will have more to say
about the DTV transition shortly.)

In areas where TV transmission is limited primarily by distance (as opposed to
mountainous terrain) and where population density is low, use of better performing
receiving antenna systems at residences may be the most cost-effective method of
expanding local television station coverage. Improved reception can be achieved by
using larger antennas, higher towers, and/or antenna preamplifiers.

Cable antenna television ("CATV") technology
is another technology that has
the potential to deliver local television broadcast signals to unserved and underserved
parts of the country. The data available to us indicate that cable television service is
currently available to approximately 97% of the 100 million television households in the
country. However, because this is a national figure, there are certainly some rural and
other remote areas of the country where cable service is not as widely available. For
example, in some states, such as Montana, Texas and Wyoming, that have large rural
areas with relatively low population densities, the percentage of households that have
access to cable service is considerably less than the national average.

Two ongoing developments may enable cable television operators to make new
inroads in rural and small communities. First, as is the case throughout much of the
communications industry, cable operators are using fiber optic technology to upgrade
and, in some cases, extend their facilities. Second, as the cable industry deploys state-of-the-art technology, it is also attempting to transform itself into a full service supplier of
communications services - voice and data, as well as video. As the industry makes this
transition and as consumer demand for advanced communications services grows, cable
operators may have new economic incentives to serve rural and small communities
currently beyond their reach.

As you evaluate the most effective means to deliver local broadcast service to
rural America, it is also important to recall that cable television operators are the only
multichannel video programming distributors that have a statutory obligation to provide
local television signals to their subscribers. In addition, cable operators are required by
law to provide their customers with local broadcast service before any other video
service.

I would further point out that, like cable companies, local telephone companies
are employing fiber optic technology to upgrade, and in some cases, extend their systems
to more distant groups of users. These systems also have the capability of carrying video
signals, and because of increased consumer demand for advanced services, telephone
companies have similar incentives to extend their coverage to rural America.

Finally, I would note that several new technologies have been proposed that hold
out the potential to serve rural and isolated areas of our country. Some of these proposals
have been submitted to the FCC for authorization. The Commission will address these
requests in a fair manner and as expeditiously as possible, bearing in mind the goal we all
share to provide coverage to unserved and underserved areas of the country.

Digital TV Transition

All of these approaches are somewhat complicated by the ongoing conversion of
television broadcasting from the present analog National Television Systems Committee
(NTSC) technology to digital television (DTV). During this transition, all stations will
continue with their present NTSC signal. DTV signals will be phased in, starting in the
largest markets, at the same time on different frequencies. Thus, at the end of the
transition now scheduled for 2006, there will be twice as many signals as at present.
Further, the flash cut over to DTV when the transition period ends could be very
disruptive if DTV is not phased in appropriately. Finally, while the transition is
scheduled to end in 2006, legislation requires that it be extended if certain milestones
related to new DTV receiver sales are not met. This uncertainty also complicates the
selection of options to extend rural coverage.

Conclusion

In conclusion, I want to express my gratitude to the Committee for the
opportunity to appear before you today. FCC Chairman William Kennard has
consistently advocated the deployment of communications services in Rural America
and, in fact, was one of the early proponents of local-into-local legislation. Chairman
Kennard is also committed to implementing the provisions of SHVIA in an effective and
expeditious manner. Indeed, the Commission has already initiated or completed two
SHVIA implementation proceedings well ahead of the deadlines called for in the SHVIA
statute. The first rulemaking proceeding proposed rules related to the good-faith standard
to negotiate retransmission consent agreements, and the second proceeding has already
adopted procedural rules to process complaints alleging that satellite providers have
retransmitted signals without broadcasters' consent.

In sum, the FCC is ready to work with Congress, NTIA, the Copyright Office, the
Rural Utilities Service and others to improve television service to Rural America. I
would be pleased now to answer your questions.